level: Earnings Per Share
Questions and Answers List
level questions: Earnings Per Share
| Question | Answer |
|---|---|
| Basic EPS Equation | (NI - *Preferred Dividends)/WACSO |
| Non-cumulative Dividends | Focus on the declared dividends ONLY |
| Cumulative Dividends | All accumulated dividends (regardless of if declared) |
| How are dividends and stock splits treated in calculation for WACSO? | Treat them as if they occurred at the beginning of the earliest period presented. |
| How are convertible bonds treated when calculating Diluted EPS? | "If-Converted" Method: Only affects EPS if dilutive. Numerator changes to NI + Int Earned (Net of Tax) Denominator adds # CS convertable |
| How are options and warrants treated when calculating Diluted EPS? | "Treasury Stock" Method: If Avg Price > Excersize Price = Dilutive Only Affects denominator # Options - ((# options*excersize price)/avg price) |